SACRAMENTO, Calif. — For weeks, Mehmet Oz has been waging a public feud with California leaders over health care fraud, accusing the blue state of failing to adequately combat such abuse.
Oz, who heads the U.S. Centers for Medicare & Medicaid Services, alleged that there was approximately $3.5 billion of fraud in the hospice and home health care industry in Los Angeles County alone. “This administration under President [Donald] Trump is not going to tolerate taxpayer dollars being stolen because people aren’t paying attention anymore. We’re focused on this,” Oz said. He claimed the fraud was largely orchestrated by the “Russian, Armenian mafia” and said that most of the money spent on home and community-based services across California “might be fraudulent.”
However, CMS clarified that not all billing activities referenced by Oz were presumed to be improper. And a review of the most recent available data shows that there are hotbeds of health care fraud across the country and across practice areas, most of them allegedly perpetrated by health insurers and other domestic actors, and that California outperforms most other states in recovering fraud dollars.
As the temperature heats up in the conflict between the Trump administration and California, a handful of Republican state lawmakers have entered the fray, accusing Gov. Gavin Newsom in a March letter of allowing “rampant fraud.” Democratic state officials insist they aggressively combat fraud, and Newsom has filed a civil rights complaint against Oz, calling language in the allegations “baseless and racially charged.”
“The Trump Administration is attempting to take the issue of fraud — a very real, and national issue — and weaponize it against Democratic states,” California Attorney General Rob Bonta said in an early February statement.
Oz said on a podcast that he would halt “hundreds of millions of dollars” in payments to California if he didn’t get satisfactory answers from state officials. He and Vice President JD Vance announced in late February that they would delay about $260 million in Medicaid payments to Minnesota, another Democratic-led state, over fraud allegations there, and the state is now suing.
Oz has also launched social media campaigns alleging high-dollar public benefit fraud in Democratic-led Maine and New York. On March 17, he added a Republican-led state to his target list: Florida.
Georgetown University professor Andy Schneider, who served as a senior adviser primarily on Medicaid integrity issues during the Obama administration, said fraud has always been an issue across states, dating back decades. About $3.4 billion in Medicare and Medicaid fraud across the country was recovered in fiscal year 2023, according to the most recent report available. Insurers have paid the highest settlements in alleged health care fraud schemes.
“Bad actors trying to steal public health care funds have been around for a long time,” Schneider said.
How California Stacks Up
The federal government is responsible for Medicare, which primarily benefits older people, while Medicaid, which primarily serves people with lower incomes, is a joint federal-state program. Melissa Rumley, a spokesperson for the Department of Health and Human Services’ Office of Inspector General, said the office could not make state-by-state data on Medicare fraud available because the federal probes often cross jurisdictions.
States file annual reports on actions by Medicaid anti-fraud units that are jointly funded with the federal government and run by state attorneys general. They investigate fraud as well as abuse and neglect of Medicaid patients.
These reports provide a sense of the scale of Medicaid fraud across states. In fiscal 2024, states recovered about $1.4 billion in fraud, compared with $949 billion in total Medicaid spending, according to a report from the HHS Office of Inspector General. California recouped an outsize share, recovering more than 50% of all the criminal recoveries made by the anti-fraud units nationwide in fiscal 2024 even though the state made up only about 17% of enrollment.
California ranked fourth in the U.S. in 2024 in dollars recovered per Medicaid enrollee across civil and criminal investigations, behind the District of Columbia, Montana, and Delaware. It led all the most populous states, followed in order by Texas, Florida, and New York. (California and federal officials noted that state recovery data varies significantly year to year, often because of the length of investigations.)
Vulnerability of Hospice Care
One aspect of health care fraud that has been at the center of Oz’s attack on California is hospice fraud, which has plagued Republican and Democratic administrations.
The use of hospice, intended to provide care to patients expected to die within six months, increased by over 8% from fiscal 2020 to 2024, to about 1.84 million Medicare beneficiaries, driving up costs significantly.
To combat fraud, the Biden administration in 2023 increased oversight of hospices in California, Arizona, Nevada, and Texas. The Trump administration last year added Ohio and Georgia.
CMS spokesperson Chris Krepich did not say specifically what criteria were used to choose which states to monitor, only that the decision was based on “activity typically indicative of hospice-related fraud.” As of June, the agency had revoked the Medicare enrollment of 122 hospices in the original four states, but Krepich said a breakdown by state was not available.
While Oz stated there was some $3.5 billion of fraud in the hospice and home health care industry in Los Angeles County alone, his agency clarified that the number is for overall Medicare billing related to hospice and home health services. Krepich said that “not all billing activity referenced in the remarks is presumed to be improper” and added that the agency could not identify the amount of fraudulent activity until an “evidence-based” investigation was completed.
That’s not to say there is no truth to allegations of hospice fraud.
A state audit published in 2022 found “numerous indicators” of large-scale fraud in Los Angeles County, and a CBS News investigation highlighted nearly 500 hospices within a 3-mile radius, including 89 companies registered to a single building in Van Nuys. Bonta has acknowledged that “hospice fraud has become an epidemic in California.” He noted that state officials have been aggressively combating it for years, including with new laws.
In January, the state charged several people in Monterey County with hospice fraud. That follows hospice scam cases in Los Angeles County and San Bernardino County.
However, California public health officials are overdue in adopting emergency regulations that were supposed to be in place by this year. The state’s Department of Public Health is currently revising the regulations, according to spokesperson Mark Smith.
In the interim, the state has revoked the licenses of more than 280 hospices over the past two years and is evaluating an additional 300 hospices, according to the governor’s office. California had more than 2,800 licensed hospice agencies as of 2022, according to the state audit.
Civil Rights Complaint
Meanwhile, Newsom is pushing back on Oz. The governor filed his discrimination complaint with the Office of Civil Rights at HHS, which oversees CMS. The office said it will first decide whether it has the authority to investigate, then, if so, will gather information through interviews and documents. However, the process seems designed to aid individuals who have lost a job to discrimination, or to correct a specific policy, and it is unclear whether there could be any real-world consequences.
The governor wants the agency to address “systematic bias from their leadership,” said Newsom spokesperson Marissa Saldivar.
Krepich said CMS “does not target communities, ethnic groups, or states” and bases its decisions on “confirmed investigative findings.” The allegations of organized fraud refer to “documented criminal cases,” Krepich said, providing a link to a hospice fraud case in which California residents were convicted of using the identities of foreign nationals to steal almost $16 million from Medicare.
It’s unclear what cases Oz was referring to when he spoke of the Russian and Armenian mafia.
Ciaran McEvoy, a spokesperson for the U.S. attorney’s office for the Central District of California, which includes Los Angeles County, said it doesn’t track whether hospice fraud defendants are alleged to be foreign nationals, but he pointed to the office’s online prosecution announcements. None alleged involvement by foreign influences or organized crime.
The state audit references allegations in 2010 by the U.S. Justice Department under President Barack Obama that an “Armenian-American organized crime enterprise” was behind a nationwide health care scam.
Federal officials at the time described an “international organized crime enterprise” based in Los Angeles and New York but with roots in Russia and Armenia. The scheme involved billing for unneeded medical treatments, not hospice fraud.
A 2020 Los Angeles Times investigation revealed fraud schemes in which hospice operators recruited patients who were not actually terminally ill, then paid kickbacks to doctors who falsely certified these patients as dying so the hospices could bill Medicare. There was no mention of foreign involvement.
